Top cities for technology start-ups

 

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It's a given that the San Francisco area, including Silicon Valley, is the technology capital of the world. Seven of the top 10 most-visited websites are based there, including Google, Yahoo, Facebook and Ask. But how does the rest of the USA fare for tech start-ups?

USA TODAY asked the National Venture Capital Association to rank the top 10 cities for start-ups, based on dollars invested in young tech companies in 2011. Brainiac-rich Boston ranked No. 2, followed by capital-rich New York City, entertainment-meets-tech Los Angeles and business-to-business Washington, D.C.

High rents in San Francisco and New York are making other parts of the country, where living expenses are lower, more attractive. Some of the hottest names in tech are building facilities elsewhere — including software maker Adobe in the Salt Lake City area, chipmaker Intel in Portland, Ore., and Apple in Austin. These areas are seeing strong job growth because of the "available talent and relatively low costs" of real estate, says Colin Yasukochi, director of market research for real estate services company CBRE.

San Francisco: The city and its environs are home to Facebook, Google, Yahoo, Zynga, Apple, Pinterest — some of the most visible tech firms in the world. Students graduate from Stanford University in Palo Alto and the University of California-Berkeley and go straight to work at one of the local companies, or start their own. For example, Stanford student Akshay Kothari created the Pulse news reader app for the Apple iPad while in college and raised $9 million for his company. Stanford grad Kevin Systrom worked at Google before branching out with his photo app, Instagram, sold to Facebook this year for a cool $1 billion.

Boston: Harvard and MIT students get scooped up to work for firms in Boston and Cambridge, but there's more. "We have over 100 colleges here and five of the top teaching hospitals," says Douglas Cole, a partner at Flagship Ventures. The biggest local commercial websites are travel-related TripAdvisor and Kayak, which Spark Capital partner Bijan Sabet notes have a combined market cap of more than $6 billion. Start-ups include online backup service Carbonite and ByteLight, an indoor GPS service. "The local angel investing market has never been stronger," and the venture investing market is aggressive, says Sabet, an early investor in Twitter.

New York: Popular blogging site Tumblr, check-in favorite Foursquare, appmaker GateGuru (airport info) and Videolicious (automatic video editing) are Big Apple hits. Rents are astronomical, but access to capital — hello, Wall Street— is easy. Just ask the Fab.com design site, barely a year old, which raised $140 million. Or Mayor Michael Bloomberg, who recently announced a $22 million fund for local tech start-ups. "We see a lot of companies start in New York with a real instinct for design," says Matt Murphy, a partner at Kleiner Perkins Caufield & Byers, a venture firm in San Francisco.